Commentary: Valuation and sentiment supports contrarian strategy
Posted by MarketWatch (the Wall Street Journal) April 29, 2013.
By Ed Maurer and Eugene Cordero
Ed Maurer is an associate professor in the Civil Engineering Department of Santa Clara University. Eugene Cordero is a professor in the Department of Meteorology and Climate Science at San Jose State University.
SANTA CLARA, Calif. (MarketWatch) — Recently, the American Society of Civil Engineers released its latest Report Card for America’s Infrastructure, a measure of the condition, capacity, and maintenance of the nation’s vital systems, accounting for their ability to meet future needs and ensure public safety and health.
How did we fare? D+. That composite grade includes things like our energy systems (D+), drinking water systems (D), waterways and levees (D-), roads (D), schools, (D), transit (D) and on and on. The brightest spot was a B- for how we deal with solid waste.
This discouraging assessment appeared on the heels of news documenting how climate change is affecting us now: 2012 shattered the record as the hottest year ever recorded in the U.S. Global warming shares some of the blame for last summer’s drought that impacted nearly two-thirds of the lower 48 states, and for the unprecedented intense heat of the Australian “angry summer.”
Satellite observations confirmed that in September 2012, Arctic sea ice levels were by far the lowest ever recorded, covering about half the area of 30 years ago. Yet another scientific report, this time from the U.K. Met Office, demonstrated that natural influences in the past decades lean more toward cooling, but humans have emitted enough greenhouse gases to warm the planet anyway.
How are these impacts of climate change connected to our infrastructure? One need only remember Hurricane Sandy, which caused more than $70 billion in damages to New York and New Jersey alone. The strong storm surge was superimposed on a sea with a baseline level four inches higher than in 1950, caused by planetary warming. The proposals to prevent damages from future storms all involve major infrastructure improvement.
Public investment is the best option for us to build the coastal defenses to protect low-lying urban areas, water and wastewater systems that are resilient to rising seas and increased rainfall intensity; transportation systems that move us more efficiently; and energy systems that can function in extreme heat, producing energy with limited carbon emissions.
The good news is that investing in infrastructure is one of the most economically productive things we can do. Rebuilding the systems that have served us for decades, but have outlived their useful lives, can create millions of jobs. The return on these investments outpaces the economic benefits we would see from other stimulus options.
If we focus on green infrastructure, promoting renewable energy sources, and crafting the most efficient water and transportation systems we can, we will also create a more sustainable world in the process.
The bill for such improvements is estimated at $3.6 trillion through 2020, roughly twice what we have spent over the past 10 years on the Iraq war. So this is within our reach, if our representatives in Washington hear a broad public appeal for action. Creative measures, like the upstream carbon pollution fee included in the Sanders-Boxer Climate Protection Act, would generate funds for improving infrastructure while creating a more climate-friendly economy.
We could hang our heads in shame at receiving such low marks on our report card. Or we can realize that our habits are not what they need to be. We must demand from our representatives a serious commitment to rebuilding the systems that sustain our lives.
We must do this with all the 21st century ingenuity we can muster, creating a model for how we do this while also reducing greenhouse gas pollution, addressing the federal deficit and promoting a sustainable future.